Recent ESI Court Decisions
	Practice Points: Year In Review – Courts Unsympathetic to Electronic Discovery Ignorance or Misconduct
	News & Events

Recent ESI Court Decisions

Court Enforces Protective Order Citing New Federal Rule of Evidence 502
Alcon Mfg., Ltd. v. Apotex Inc., 2008 WL 5070465 (S.D.Ind. Nov. 26, 2008). In this patent infringement lawsuit, the plaintiffs argued the defendants should delete or return an inadvertently produced electronic document containing privileged information and that the document should be stricken from the expert report pursuant to a stipulated protective order. The defendants argued that the plaintiffs waived privilege when they failed to object to the document's introduction during two previous depositions. Finding the plaintiffs had complied with the protective order by asserting privilege within days of discovering the inadvertent production, the court ordered the defendants to delete or return the privileged document and to redact any references to it.

Court Refuses to Allow Party to "Thumb through Non-Party's Electronic File Drawer" to Seek Relevant Documents
Integrated Serv. Solutions, Inc. v. Rodman, 2008 WL 4791654 (E.D.Pa. Nov. 3, 2008). In this ongoing litigation, the plaintiff sought production of responsive electronic data contained on computers owned by a non-party. The parties to this dispute agreed to retain a vendor to perform a search of the laptop in question, to determine whether it contained, or once contained, any documents responsive to the subpoena. The plaintiff also sought the vendor report detailing the inspection, claiming there was an understanding between the parties that such a report would be provided. The non-party argued against production asserting the search terms were overbroad and likely to reach competitive information that was irrelevant to the litigation at hand and that there was no agreement to provide the vendor report. Accepting the non-party's assertions of non-responsiveness, the court denied the plaintiff's motion to compel. The court stated it would not require the non-party to allow the plaintiff, a competitor, to "thumb through an electronic file drawer" to double-check document review for relevance. However, the court found evidence of an understanding that the plaintiff would receive a written vendor report and allowed the plaintiff the option to seek the report at its own expense.

Court Denies Motion to Compel Finding Requests Extraordinarily Overbroad
Moore v. Abbott Lab., 2008 WL 4981400 (S.D.Ohio Nov. 19, 2008). In this employment discrimination case, the plaintiff filed a motion to compel discovery, seeking documents unrestricted by time frame, geographic area or number or type of job applicants. The defendant argued that it previously produced 14,000 pages of documents, that further review of e-mail would cost $300,000 and that it should not have to spend additional time and money to produce non-relevant documents. Agreeing with the defendant, the court found plaintiff's discovery requests, "extraordinarily overbroad." The court stated that, "mere speculation about relevance," is not enough to order production of requested documents. Accordingly, the court denied the plaintiff's motion.

Court Finds Discovery Misconduct Irrelevant to Attorney-Client Privilege Waiver Analysis under New Federal Rule of Evidence 502
Laethem Equipment Co. v. Deer and Co., 2008 WL 4997932 (E.D.Mich. Nov. 21, 2008). In this ongoing breach of contract dispute, inter alia, the defendant sought production of electronically stored information (ESI) and an order establishing waiver of the attorney-client privilege based on plaintiffs' alleged discovery misconduct. The defendant argued that the plaintiffs withheld relevant e-mails, were untruthful in past discovery responses and waived privilege by inadvertently disclosing two disks. Opposing the motion, the plaintiffs argued they had properly responded to each of the defendant's requests and that additional production would be an undue burden. As jurisdiction was based on diversity of citizenship and absent objection from either party, the court analyzed the privilege waiver issue under new Fed.R.Evid. 502(b). The rule establishes that disclosure does not operate as a waiver if: (1) the disclosure was inadvertent, (2) reasonable steps were taken to prevent disclosure and (3) reasonable steps were taken to rectify the error. Finding each of these criteria satisfied, the court held that privilege was not waived. The court noted that Fed.R.Evid. analysis does not take into consideration alleged discovery abuses, focusing instead on the disclosure of the privileged information itself.

State Supreme Court Finds Willfulness Not Required to Impose Sanctions
Barnett v. Simmons, 2008 WL 4853360 (Okla. Nov. 10, 2008). In this breach of contract case, the trial court required willfulness for the imposition of sanctions and the plaintiffs appealed. The Court of Civil Appeals affirmed the trial court's ruling, but remanded for consideration of whether sanctions could be imposed for mere negligence. Both sides petitioned for writs of certiorari. In the underlying dispute, the plaintiff sought unpaid royalties on an oil lease and the defendant filed a motion to compel production of certain files on the plaintiff's computer. Defendant's motion to compel was granted by the trial court. Subsequently, the plaintiff enlisted the help of several computer experts to remove alleged viruses, neglecting to mention that the hard drive was the subject of a court order. During the expert analysis, several files were deleted as a result of the use of numerous data wiping programs. Citing Oklahoma's discovery code �3237(B)(2) (which mirrors Fed.R.Civ.Pro. 37(b)(2) and authorizes sanctions for the failure to comply with a court order) the Court held that the trial court erred as a matter of law in determining that sanctions could be imposed only upon a showing of willful conduct. The Court determined that willfulness is relevant to the severity of sanctions imposed, but not to whether sanctions should be imposed. Accordingly, the Court reversed and remanded for reconsideration of the defendants' motion for sanctions.

Court Rules Printed Government Webpages are Self-Authenticating
Williams v. Long, 2008 WL 4848362 (D.Md. Nov. 7, 2008). In this employment compensation dispute, the plaintiffs filed for conditional class action certification and submitted several affidavits and printed webpages from official websites, consisting of case search results and a copy of a similar complaint in support of the motion. Citing Lorraine v. Markel Am. Ins. Co., Magistrate Judge Paul W. Grimm stated that accepting electronically stored information as evidence implicates a series of "evidentiary hurdles" that must be cleared, including relevancy and authenticity. Magistrate Judge Grimm held that since the web pages were printed from government web sites, they were self-authenticating, "official publications," and thus clear the authentication hurdle. Finding the webpages authentic and relevant to the issue of class certification, the court turned to the issue of hearsay. Finding that the requirements for the hearsay exception for public records were met, the court granted the plaintiffs motion to conditionally certify the class.

Court Grants Access to Proprietary Software Owned by Third-Party Upon Showing of Necessity
Opperman v. Allstate New Jersey Ins. Co., 2008 WL 5071044 (D.N.J. Nov. 24, 2008). In this class action lawsuit, the plaintiffs sought production of third-party owned proprietary software licensed and used by the defendants. The plaintiffs claimed they needed unfettered access to the software to determine how the defendants determine property loss adjustments and if the supply prices were manipulated or altered. The defendant and third-party opposed this request, claiming all relevant evidence was previously produced; less intrusive means were not exhausted; and unfettered access was not necessary. Finding the software relevant and necessary to the plaintiffs' claims, the magistrate judge ordered the defendant to produce the software in an accessible form. Additionally, to circumvent the potential harm of allowing discovery of the third-party trade secret, the court entered a Discovery Confidentiality Order, limiting access and use of the software.

Court Denies Untimely Motion for Sanctions
Kinnally v. Rogers Corp., 2008 WL 4850116 (D.Ariz. Nov. 7, 2008). In this age discrimination litigation, the plaintiffs sought an adverse inference sanction alleging spoliation of relevant evidence. The plaintiffs claimed the defendant failed to issue a litigation hold, failed to produce document retention and destruction policies, and failed to produce certain evidence, which resulted in spoliation. The defendant argued the plaintiffs' motion was raised after the close of discovery and was therefore untimely and also that the plaintiffs failed to show that any of the requested documents were destroyed. Finding the discovery dispute should have been raised during the allowable discovery period, the court denied the plaintiffs' motion as untimely. Moreover, the court determined the motion, had it been timely, would have been denied due to the lack of evidence that information was destroyed.

Court Awards Fees and Costs for Belated and Impartial Production
Keithley v. Home Store.com, Inc., 2008 WL 4830752 (N.D.Cal. Nov. 6, 2008). In this ongoing patent infringement litigation, the defendants sought multiple types of sanctions alleging the plaintiffs produced documents too late and committed spoliation. The defendants argued the late production and spoliation were prejudicial, caused them to conduct last-minute "triage" discovery and prevented them from conducting important depositions. Finding the belated production and failure to produce e-mail attachments to be negligent, the magistrate judge issued sanctions under Rule 37, awarding fees and costs reasonably attributed to the spoliation. Additionally, the court extended the discovery cutoff date for the limited purpose of allowing the defendants to take additional depositions.

Court Provides In-Depth Analysis of the Discoverability of Metadata
Aguilar v. Immigration & Customs Enforcement Divis. of United States Dept. of Homeland Security, 2008 WL 5062700 (S.D.N.Y. Nov. 21, 2008). In this civil rights class action alleging unlawful searches of homes, the plaintiffs sought production of metadata from various types of ESI including e-mail, word and excel documents and databases. Noting that the production of metadata should have been discussed at the Fed.R.Civ.P. 26(f) conference, the court went on to consider the various metadata production requests. Regarding e-mails and backup tapes, the court found the plaintiffs' requests untimely and too costly for the little benefit potentially gained. The court then discussed Word documents and PowerPoint presentations and ordered the production of metadata if the plaintiffs were willing to bear all costs associated with its production; despite finding the metadata sought was marginally relevant, not critical to pretrial presentation and was untimely requested. Additionally, declining to find production unduly burdensome for Excel spreadsheets, the court granted production of the metadata as requested from Excel files.

Court Holds Traditional Balancing Test Should Determine Reasonableness of Inadvertent Privilege Disclosures after Showing of Minimal Compliance with Rule 502(b)
Rhoads Indus., Inc. v. Bldg. Materials Corp. of America, 22008 WL 4916026 (E.D.Pa. Nov. 14, 2008). In this breach of contract litigation, the defendants sought an order determining attorney-client privilege to be waived by plaintiff's production of over eight hundred allegedly privileged documents. The defendants argued that the production was careless, the plaintiff delayed in seeking return of the documents and the plaintiff failed to produce complete and accurate privilege logs. The court applied the test of newly enacted Fed.R.Evid. 502, which weighs three factors in determining whether an inadvertent disclosure should constitute a waiver: 1) whether the disclosure was inadvertent, 2) whether the holder of the privilege took reasonable steps to prevent disclosure and 3) whether the holder of the privilege took reasonable steps to rectify the error. The court held that once the producing party has shown at least minimum compliance with the three factors in Rule 502(b) but when reasonableness is still in dispute, the court should look to the traditional five factor test set forth by Fidelity & Deposit Co. of Maryland v. McCulloch: 1) reasonableness of precautions taken to prevent inadvertent disclosure; 2) number of inadvertent disclosures; 3) extent of disclosure; 4) delay and measures taken to rectify disclosure; and 5) whether overriding interests of justice would or would not be served by relieving the party of errors to find evidence of an inadvertent waiver. Finding the first four factors to be in favor of the defendants and the fifth factor to strongly favor the plaintiff, the court determined there was no waiver of privilege of the remaining documents.

To view additional case summaries visit www.krollontrack.com/case-summaries/.

Practice Points: Year In Review: Courts Unsympathetic to Electronic Discovery Ignorance or Misconduct

This past year highlighted a major trend in cases concerning issues involving the exchange of electronically stored data: an increase in judicial unwillingness to display compassion or tolerance for negligent e-discovery blunders. Courts are increasingly imposing sanctions for discovery misconduct and for the failure to properly preserve and produce electronically stored information (ESI). In fact, of the approximately 138 reported electronic discovery opinions issued from Jan. 1, 2008 to Oct. 31, 2008, over half addressed court-ordered sanctions, data production, and preservation and spoliation issues. A rough breakdown of the issues involved in these cases is as follows:

• 25% of cases addressed sanctions
• 20% of cases addressed various production considerations
• 13% of cases addressed preservation and spoliation issues
• 12% of cases addressed computer forensics protocols and experts
• 11% of cases addressed discoverability and admissibility issues
• 7% of cases addressed privilege considerations and waivers
• 7% of cases addressed various procedural issues
• 6% of cases addressed cost considerations

Court Imposes Sanctions for "Egregious" E-Discovery Misconduct
Keithley v. Homestore.com, Inc., 2008 WL 3833384 (N.D.Cal. Aug. 12, 2008). In this patent infringement litigation, the defendants' failure to issue a written document retention policy well after its preservation duty arose led the court to label the discovery misconduct "among the most egregious this court has seen." The court ordered the defendants to pay over $250,000 in fees and costs associated with prior and future motion practice and expert fees, deferring additional amounts until actual fees can be determined, while also imposing an adverse jury instruction against the defendants.

Court Orders Forensic Examination and Denies Cost Shifting, Citing Producing Party's Discovery Misconduct
Peskoff v. Faber, 2008 WL 2649506 (D.D.C. July 7, 2008). In this ongoing contract dispute, the court followed up on its previous holding that it was appropriate to ascertain the cost of a forensic examination to determine if the cost was justified. The court found the defendant's inadequate search efforts, failure to preserve electronically stored information and overall unwillingness to take "discovery obligations seriously" caused the need for a forensic examination. Since the problem was one of the defendant's "own making," the court refused to shift costs.

Court Orders Production of Text Messages
Flagg v. City of Detroit, 2008 WL 3895470 (E.D.Mich. Aug. 22, 2008). In this ongoing wrongful death action, the defendants argued the court's previous order that established a protocol for the production of text messages violated Stored Communications Act. The court was willing to modify the means of production and ordered the plaintiff to file a Fed.R.Civ.P. 34 production request, finding a third-party subpoena unnecessary. See also Flagg v. City of Detroit, 2008 WL 787061 (E.D.Mich. Mar. 20, 2008).

Magistrate Orders Parties to Cooperate in Production and Advised Expert Testimony May be Needed for Judicial Review of Search Methods
United States v. O'Keefe, 2008 WL 449729 (D.D.C. Feb. 18, 2008). In this criminal prosecution, the co-defendant filed a motion to compel claiming the government did not fulfill discovery obligations. Applying the Federal Rules of Civil Procedure to this criminal action, Magistrate Judge John M. Facciola ordered the parties to participate in a good faith attempt to reach an agreement on production. The court also suggested that judicial review of search methods may require expert testimony, since for lawyers and judges to make search term effectiveness, judgments are to go "where angels fear to tread." See also United States v. O'Keefe, 2008 WL 3850658 (D.D.C. Aug. 19, 2008).

Court Denies Motion to Retract Privileged Documents Finding Lack of Reasonable Precautions Taken
Victor Stanley, Inc. v. Creative Pipe, Inc., 2008 WL 2221841 (D. Md. May 29, 2008). In this copyright infringement case, the plaintiff sought a ruling that 165 electronic attorney-client privileged and work-product protected documents produced in discovery were discoverable. Determining the defendants did not take reasonable precautions by relying on an insufficient keyword search to prevent inadvertent disclosure, the court found the defendants waived their privilege. The court noted several measures could have helped prevent this waiver, including a clawback (or other non-waiver) agreement the defendants voluntarily abandoned and/or complying with the Sedona Conference Best Practices for use of search and information retrieval.

The above cases, combined with many additional 2008 cases involving ESI, reveal an increased focus on the legal and technical issues involved in the collection, review and production of ESI. Recent cases reveal that attorneys and legal teams are becoming more technologically savvy and judges are expecting early and comprehensive collaboration amongst parties. Future decisions will likely continue to reveal increased understanding of the legal and logistical issues involved in e-discovery, as well as advances in technology designed to increase the efficiency of the process.

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News & Events

Kroll Ontrack Wins Big at this Year's Law Technology News Awards
Each year, Law Technology News recognizes vendors and law firms for their innovative use and implementation of technology in the litigation field. Vendor products and services are evaluated by LTN subscribers through an online voting system, and gold, silver and bronze honorees are chosen based on the number of votes. This year, Kroll Ontrack is proud to be the recipient of eight individual Law Technology News Awards. Furthermore, Kroll Ontrack's Legal Technologies products and services were recognized in each of the categories in which they were nominated. For the full story, please visit: www.krollontrack.com/news-releases/.

Kroll Ontrack Offers Redesigned E-Discovery Certification Course for 2009
The industry's legal technology thought leader has revamped its E-Discovery Certification Course for 2009 with updated topics, additional speakers and dual track, customizable sessions to appeal to beginner, intermediate and advanced learners. The redesigned course curriculum is ideal for legal and technical professionals of all levels, including in-house counsel, law firm attorneys, litigation support professionals, paralegals, IT staff and members of the judiciary. For more information and to register for an upcoming course, visit www.krollontrack.com/certification-courses/.

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This newsletter was written by Gina Jytyla and Joni Shogren, Kroll Ontrack staff attorneys, with assistance from Kelly Kubacki and Meridith Socha, Kroll Ontrack law clerks. Ms. Shogren can be contacted by writing to jshogren@krollontrack.com.

For more information about electronic discovery and computer forensics services, contact Kroll Ontrack at 800 347 6105 or visit www.krollontrack.com.